One of the things small owners may want to consider and is really a pretty good idea is what they call these home warranty programs. These programs are basically insurance that cost $400 to $500 per year and you essentially insure your entire house.

There is a deductible and if something breaks and the warranty people have to come out and inspect or repair it, you're only charged $50 or $60 typically. That's your exposure. If it costs them more to fix it, then they have to pay it. You've bought insurance above that. They work fairly well. Some of them work better than others, but for the most part they work fairly well.

They are not always fast. They don't work great, if it's like a heater in the middle of winter. They have to use their particular workman and sometimes it takes a while for them to call back. Things like that at times are a little bit problematic.

Typically if it's done right these things work and you just have to work within them. They're really not a bad plan at all. They really limit your maintenance exposure. Once the tenant's in there you're only exposed to $50 or $60 if something breaks. It's really something you want to consider.

Rehab Versus Normal Ongoing Maintenance

The other thing you have to remember is make sure you think about whether you're doing a fairly major rehab versus normal ongoing maintenance. Normal ongoing maintenance is something that would be covered under your home warranty program if you were to buy that. That's something to consider.

If you're doing a fairly substantial rehab at the beginning, you obviously would budget and plan for that. Get the rehab done and then purchase the home warranty program.

One of the things I wrestle a little bit with owners is the fact that as a landlord you have a duty to provide good quality safe housing. That means if something breaks you have to fix it. If a window, heater, or hot water heater breaks, you as the owner would have to fix it. That's part of the obligation of being a landlord.

I understand you collect rents and do all that, but in the end you also have an obligation to that tenant to provide them with good quality, safe housing. It doesn't have to be extraordinary housing or anything of that nature, but it has to be good quality safe housing.

If something breaks you really have got to fix it in a fairly timely manner. I guarantee you the number one complaint that we get from tenants is not responding to maintenance items fast enough.

We get a lot of tenants that say, "The landlord will not return my call. Whenever I call them blah-blah-blah." That is one of the ways, and I think we spoke about that the first call. You upset the tenants, they get tired of that, and that's when they leave and you lose a good tenant. If you perform the maintenance quickly and professionally on time, the tenants will be much happier to stay.